Although retail sales in Hong Kong during June were up by more than 12 percent compared to the same period a year ago, those figures have not yet turned into stronger rental demand for shop space in the city, where many retailers continue to either abandon their streetfront premises or negotiate cheaper deals with their landlords.

Causeway Bay Still Facing Headwinds

Nike’s new deal work out to around HK$214 per square foot per month, with the 25 percent markdown coming despite the building’s owner, Hysan Development Company, having originally set a reported asking rental at the same rate as Esprit’s previous lease, which had been signed in 2014.

Across the district, which perennially ranks among the world’s most expensive places to rent a shop, landlords have been facing tough negotiations with tenants. By the end of the first quarter of this year, shop rents in the Causeway Bay were down by 53 percent from their peak in the fourth quarter of 2014, according to JLL.

During March, fashion brand Twist leased a two-storey shop at 24-26 East Point Road in Causeway Bay for 56 percent less than the HK$1.1 million monthly rent that the previous tenant had been paying, according to press accounts. While on Russell Street, once the most expensive retail street in the world, Swatch Group in April was able to renew its lease at a rate some 33 percent less than the HK$1 million per month agreed to three years prior.

Esprit Replaced by Shoe Sellers

This latest Causeway Bay shop turnover marks the second time in the last three months that a sportswear retailer has feasted on Esprit’s misfortune. During the second quarter athletic shoe seller Foot Locker took over Esprit’s former 26,000 square foot mega-shop in Tsim Sha Tsui’s Yue Hwa International Building for HK$2.5 million per month – about 44 percent less than Esprit had been paying.

Esprit, which was formerly controlled by Hong Kong businessman Michael Ying and who remains the company’s largest shareholder, suffered a net loss of HK$954 million in the second half of 2017 and earlier this year announced a plan to close more than 40 shops in Europe.